(Adds detail on negotiating teams)
By Alastair Macdonald
BRUSSELS, Dec 15 (Reuters) - European Union leaders agreed on Thursday how they will organise negotiations with Britain that they expect to start within four months.
This is how the process looks:
Prime Minister Theresa May’s formal notification of British withdrawal from the EU treaty under Article 50 is critical. She repeated at the summit her plan to notify by the end of March.
Article 50 sets a two-year countdown to Brexit. With no deal, Britain would still be out but with loose ends. The deadline can be extended, but only if there is mutual consent - unlikely.
The EU wants a deal before an EU election in May 2019. But London judges may upset May’s timetable over legal bids to give lawmakers more say on Brexit. Political dynamics may also shift.
On getting May’s letter, European Council President Donald Tusk will call a summit of the other 27 leaders within weeks - France’s April 23-May 7 presidential election may affect timing. The 27 will mandate the EU executive, the European Commission, to negotiate according to guidelines fixed by the Council.
One issue in arguments in Britain over how withdrawal can be triggered following the non-binding referendum in June is whether London could change its mind later and stay in. The view in London is no, but in Brussels most think it can..
Negotiations will have to wind up about October 2018, the EU reckons, to give time for parliamentary ratification processes.
Divorce, transition, future. Barring a “cliff edge” falling out, Britain and the EU would agree withdrawal terms by 2019 and an interim deal to avoid disruption during negotiation of a new trade accord that experts reckon could take five to seven years more.
While there is a degree of consensus on what must be settled in the withdrawal treaty, which would need only majority backing among EU states, much beyond that is unclear - mainly because it is unclear what Britain will ask for. Any transition deal would depend on having some idea what it was a transition to - and it would probably have to be agreed by the 27 unanimously.
Key parts of a future relationship will be terms of access to the EU single market for British-based firms and how far Britain will accept immigration from the continent, arbitration by EU judges and to pay into EU budgets in return for access.
These are the EU’s priorities for the withdrawal treaty:
1. The house, bank accounts and pensions. The British state, businesses and citizens contribute to and receive from the EU - an annual net 10 billion euro budget payment a year. On leaving, London may keep paying for some years, for example to cover pensions of EU staff or agreed but not yet disbursed spending. EU officials’ rough estimates total about 50 billion to 65 billion euros.
2. The kids. More than 3 million non-British EU citizens live in Britain and more than a million Britons live elsewhere in the EU. Neither side thinks mass deportations are desirable or likely. But EU leaders’ hard line against a quick deal on this shows reluctance to give up a politically powerful card.
3. The borders. They need to settle customs measures for goods and probably special arrangements for the only UK-EU land border, on the island of Ireland.
4. Court cases. Among a host of lower-profile issues to be settled will be agreeing how to handle outstanding cases involving Britain at the European Court of Justice.
LOOK WHO‘S TALKING - THE NEGOTIATORS
This is what in EU-speak is called “Chefsache” - German for ‘a matter for the bosses’. May and her 27 counterparts will take the final decisions. However, the details will first have to be worked on by legions of lesser officials.
The Council president, Tusk, a conservative former prime minister of Poland, will hold the ring for the other 27 states. A Brexit Working Party headed by a Council staffer will liaise between the national leaders and the lead negotiator, Michel Barnier.
President Jean-Claude Juncker’s European Commission will do the heavy lifting of detailed negotiation and legal drafting. Barnier, a French former minister who irked London when financial services commissioner, runs the Commission’s Brexit Task Force. His deputy is German trade expert Sabine Weyand.
His team will also feature a representative of the country holding the Council presidency - Malta until June, then Estonia for six months, followed by Bulgaria, Austria and Romania.
The European Parliament must approve any deal and will have representatives in meetings to prepare summits on Brexit. It will be kept updated on the progress of talks. Its point man is Guy Verhofstadt, a liberal former Belgian prime minister seen in London as an arch eurofederalist. Verhofstadt and fellow MEPs are angry not to have a bigger role in the actual negotiations.
Editing by Elizabeth Piper and Peter Cooney